Getting to the Points

Last October, Deloitte and Touche surveyed more than 4,000 travelers to assess customer loyalty in the hotel industry. The results revealed that loyalty programs have little to no impact on the purchasing decisions of travelers and actually help drive brand-switching behavior. To win over guests and create long-term loyalty, the report said, hotels would do better stepping back from doling out reward points and focus instead on personalized attention and services.

“The world’s changed,” says Adam Weissenberg, vice chairman and global leader of the travel, hospitality, and leisure segment at Deloitte. “Fifteen or 20 years ago, the hotel business was opaque in terms of pricing. With the onset of the Internet and the ability to find things online, it has become transparent. A lot of things that created reasons for loyalty programs have gone away.”

Research from Deloitte shows that 41.6 percent of high-frequency travelers are members of four or more loyalty programs. The survey also revealed that hotel guests spend as much as half their budgets with non-preferred brands. In fact, modern-day loyalty programs often encourage comparison shopping based on which program is offering a specific deal or incentive at the time of booking.

Weissenberg says this is further proof that the old standards of hotel loyalty programs aren’t resonating with today’s consumers. “You have to go back to the drawing board and almost completely re-create loyalty programs,” he says. “Points aren’t as important as people think they are—guests aren’t staying at hotels because they get points.”

Weissenberg says hotels need to do a better job of mining the customer data they collect from loyalty programs to provide guests with customized services. Some hotel companies, such as Starwood with its Ambassador program, are tailoring specialized concierge programs to elite loyalty members. But in order to create long-term allegiance on a larger scale, Weissenberg says this kind of attention to customers’ preferences needs to filter down to the lower rungs.

“If you create something unique around specific traveler information, that’s hard to copy,” Weissenberg says. “Then you have a competitive advantage because you’re doing something that your competitors can’t easily replicate. That’s the way of the future.”